Financial mis-selling refers to when you choose a mortgage based on advice that turns out to be unsuitable. It means the risks of the mortgage you chose weren’t explained to you adequately.
An advisor must recommend an option that will work for you in a manner that is ‘fair, clear and not misleading’, according to the FCA.
If you aren’t made aware of any risks, then you may be able to claim compensation. This also applies if your investment turns out to be riskier than you wanted – it doesn’t just apply if you lose money.
However, you can’t complain or expect compensation if an investment performs badly. Some are inherently riskier than others, and providing this was explained to you, it’s your responsibility.
Some of the ways that you can be mis-sold a mortgage include:
• Failure to be informed about the commission that the advisor would get from the lender.
• If the end date of your mortgage is after your retirement date.
• Being advised to borrow without proving your income (self-certify).
• If you were advised to say that you earn more than you do so you could borrow more.
• Being told to switch lenders without being informed about the penalties and fees you would incur.
• If you have a fixed-rate mortgage with the advice to re-mortgage later on, and are then subject to penalties for leaving the fixed rate early.
• If you weren’t informed about the risk involved.
If you are mis-sold, you can make a complaint to the Financial Ombudsman. To do so you need to collect and submit information before three years pass from the date you realised that you had been mis-sold the mortgage.